Premium
SUPPLIER INNOVATION IN THE PRESENCE OF BUYER POWER
Author(s) -
Chen Zhiqi
Publication year - 2019
Publication title -
international economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.658
H-Index - 86
eISSN - 1468-2354
pISSN - 0020-6598
DOI - 10.1111/iere.12355
Subject(s) - bargaining power , incentive , variety (cybernetics) , business , position (finance) , industrial organization , microeconomics , quality (philosophy) , product (mathematics) , power (physics) , investment (military) , economics , finance , computer science , philosophy , geometry , mathematics , physics , epistemology , quantum mechanics , artificial intelligence , politics , political science , law
This article analyzes the impact of retailer buyer power on a supplier's incentive to conduct innovation, with a focus on the supplier's investment in product variety and quality improvement. The analysis shows that an increase in buyer power, manifested through either a weakening of the supplier's bargaining position or a strengthening of a large retailer's bargaining power, leads to greater product variety and higher quality if the elasticity of demand is not too large. Increased buyer power, manifested through a strengthening of a large retailer's bargaining position, stimulates the supplier to invest more in quality improvement.